These pages are for employer use only. Member information can be found on the home page.
Under the Local Government Pension Scheme Regulations, employers are required to formulate and publish a policy statement in relation to the exercise of a number of discretions under the LGPS. These must be kept under review and where changes are made, members must be given one month’s notice of the change.
The full list of employer discretions can be found on the lgpsregs.org website.
The discretions that must be included in the policy are referred to on the list of discretions signified with a * next to them and must have a published statement while the others are optional.
In formulating and reviewing your employer policy, you are required by the Regulations to have a regard as to the extent to which the exercise of its discretionary powers could lead to a serious loss of confidence in the public service.
Please be aware that the exercise of certain discretions will also require the agreement of the Pension Fund. If you are making such a decision, please ensure that you engage with the Fund during the process and not wait until after you have made the decision to contact the Fund. The Governance Compliance Statement outlines the Fund’s current policy.
Some key points for employers around discretions:
- The LGPS requires employers to publish a policy statement which needs to be completed and approved by the appropriate people in your organisation. It is required to be “published” so needs to be available to employees and the general public.
- The LGPS Regulations state that all employers should have an employer’s discretions policy in place by 1st July 2014 in line with the change in regulations implemented from 1st April 2014.
- A copy must be sent to the Fund, and re-sent when any changes take place, within a month of them becoming active.
- The application of individual discretions can be applied to individual posts, to particular groups, be universal or be decided on a ‘case by case basis’. But, you must state this in your policy (although we recommend that you take into account discrimination laws when considering the wording for these).
- Any costs occuring as the result of an employer exercising a discretion are re-charged to the employer and a quote must be requested from the Pensions Team before a decision is made.
- A copy of your completed policy should be sent to firstname.lastname@example.org to be recorded on file.
Transfer of previous pension rights
Applications from scheme members to transfer in previous pension rights must be made no later than 12 months from the beginning of their employment. The Pensions Team should have been notified about potential transfers by the members declaring any previous pension benefits on the New Member Form.
However, an employee wishing to transfer in benefits outside of this 12 month time limit can ask their for employer permission to allow the transfer. Both the employer and the Pension Fund must agree to allow this transfer in. Once such a request has been made to the employer, the employer should notify the Pension Fund. In order for the Fund to agree a transfer, it must be assured that the employer has exercised its discretion in line with its policy (if one has been made) and that the employer is aware of the potential financial implications of allowing the transfer. The Fund’s policy on supporting transfer in requests can be found in the Governance Compliance Statement.
Extending the 12 month limit for transfers in is an employer discretion. Whilst this is not one of the mandatory discretions listed under the 2013 Regulations, it is recommended that employers include this particular discretion in their Discretions Policy as it is one of the most frequently requested uses of an employer’s discretionary power.
Need help writing your discretion policy? A template and a training video are now available.
The Pensions Team ran a training course on Employer discretions in April 2014 and, the LGA does have guidance on making a discretions policy on their website.
However, as this is an area employers struggle with the Fund has purchased a template to not only assist employers in making their policy but to ensure it is compliant with the regulations. As the Fund has had to purchase this document it should not be shared with a third party.
The document includes a multiple choice template and covers all the discretions you must have a written policy on from April 2014, plus some other you may like to have a policy on.
The full document provides:
- an introductory report which you can use for your relevant Committee or Board, etc. that is responsible for approving your discretions policies,
- annexes covering each of the discretions upon which you have to have a written policy and those that are recommended to have a written policy,
- information on ‘fettering of discretions’, and
- information for local authorities with staff in maintained schools that have a delegated budget.
The template can be requested from Shropshire County Pension Fund’s Communications Officer, Rebecca Clough by emailing Rebecca.email@example.com.
The document is quite long (77 pages) as it explains what the discretion is, who it can be applied to, matters the employer may wish to consider, cost implications and then sets out a range of pre-drafted policies for each discretion from which you can choose if you so wish.
We hope by investing in a pre-prepared template document it saves you having to prepare a policy from scratch and helps your policy to conform with the requirements of the regulations.
Watch a training video
At the Employers Meeting in 2015, a presentation was given to attendees on making a discretion policy entitled ‘Employers Discretions Policies in the LGPS’. Watch the presentation by following the below link. Please be aware that the link will redirect you to the Youtube website.